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Voters Reject Tax Increases, Back Bonds for Higher Ed

October 24, 2012

While election night's main focus was on the presidential race, the importance of ballot measures for states and metros is growing as public services and budgets are being severely trimmed. A recent article in The New Republic reports on a new trend where states are embracing ballot measures as a potential source of dedicated funds for targeted investments in regional economic growth and development.

Aside from California Gov. Jerry Brown's victory in raising taxes on top earners to help fund education and balance the budget, most state measures to increase taxes were defeated by voters. This includes extending a one-cent sales tax increase in Arizona, a cigarette tax increase in Missouri and implementing a 1 percent sales tax increase in South Dakota — all of which were slated to fund education.

Voters were more supportive of borrowing to invest in higher education infrastructure, but rejected measures to improve teacher standards and build new revenue streams for universities. The only energy issue on the ballot appeared in Michigan and failed to garner enough voter support. Measures to provide more state authority for providing economic development incentives drew a mixed bag.

Listed below are the outcomes of TBED-related ballot measures tracked by SSTI, broken down by category and reflecting unofficial results from state websites and the media. More in depth descriptions of the measures are available in the Oct. 3, 2012 issue of the Digest.

Economic Development Incentives & EnergyA measure backed by Alabama Gov. Robert Bently that would make at least $150 million available to recruit new industries to the state was approved by voters 69-31 percent. Amendment 2 converts a one-time funding source into a revolving source of capital to help the state build incentive packages for economic development.

A similar measure, however, failed in South Dakota 58-42 percent. Voters rejected Referred Law 14 to establish a state fund to grant money to large economic development projects.

In Michigan, voters rejected the only energy measure on the ballot by 63-37 percent with nearly all precincts reporting. The 25 by 25 renewable measure would have required utilities to provide at least 25 percent (up from 10 percent) of their annual retail sales of electricity from renewable sources by 2025.

Capital Bonds for Higher EducationBorrowing to support higher education infrastructure improvements at public college campuses won approval in New Jersey and New Mexico. In Maine, a similar measure was defeated by a very slim margin of 51-49 percent with 99 percent of precincts reporting.

New Jersey voters approved a $750 million bond package where the largest share of $300 million is slated for public research universities. With 61 percent approval from voters, New Mexico's State Bond C allocates nearly $120 million to higher education institutions for renovations to science buildings and laboratories.

In Maine, Question 2 was narrowly defeated by two percentage points. The measure would have allowed the state to issue bonds totaling $11.3 million for capital improvements and to expand the state's community colleges system to train more students for existing high-wage jobs.

In Idaho, Proposals 1, 2 and 3 made up the Students Come First initiative to implement policies making it easier for school districts to recruit and retain STEM teachers. Supporters argued that the reforms would have given schools the ability to retain teachers based on need and not just tenure as well as on core competency rather than seniority.

South Dakota voters defeated Referred Law 16, which would have established a teacher scholarship program for college students who commit to teaching in critical needs areas and provide schools with funding to reward math and science teachers through bonuses. The measure was rejected by 68 percent.

SJR 8223 in Washington was defeated 56-44 percent. The constitutional amendment sought to help universities build new streams of revenue without raising taxes.

StatehoodA slim majority of Puerto Ricans voted to approve a nonbinding referendum that would make the island the 51st U.S. state, according to The Washington Post. The measure requires final approval from Congress.

TaxesOnly California approved tax hikes for funding education and shoring up the state budget while at least three other states rejected tax increases, including Arizona, Missouri and South Dakota.

In California, Gov. Jerry Brown's temporary tax increase proposal (Proposition 30) to fund education was passed with 54 percent of the vote. Voters defeated a measure proponents said was necessary to improve efficiency and transparency in government. Proposition 31 would have established a two-year budget cycle and allow the governor to unilaterally cut spending in some instances during fiscal emergencies. That measure was defeated 61-39 percent.

With nearly all precincts reporting, Arizona Proposition 204 was defeated 65-35 percent. Known as the Quality Education and Jobs Act, the measure would renew a voter-approved one-cent sales tax to provide dedicated funding for education, transportation and infrastructure and human services.

Missouri voters rejected Proposition B by a slim margin of 51-49 percent. The measure sought to raise cigarette taxes by 73 cents per pack to pay for public schools, higher education and tobacco prevention program. If passed, the measure was expected to raise about $280 million per year.

South Dakotans sided with Gov. Dennis Daugaard by rejecting the proposed one-cent sales tax increase to fund education. In an op-ed piece, the governor praised the state's small and efficient government, saying the state already had a "winning formula" for education funding.

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